Waitaki maintains profit quality

Press, 7 December 1985, Page 21

Waitaki maintains profit quality

By

SIMON LOUISSON,

Waitaki NZ Refrigerating, Ltd, soon to be known as Waitaki International, Ltd, has reported an unaudited profit of $33.8 million, compared with $31.1 million last year. The profit for the year to October 1 does not include any extraordinaries ($1.4 million, 1984), and was on turnover of $645.2 million ($532.3 million). The quality of the profit, which was in line with market expectations, was emphasised through the additional tax paid this year, because of lost export incentives ($14.6 million against $9.3 million) and the fact that in 1984 the company received a $7 million s gift” through devaluation. Profits from processing operations rose to $20.7 million compared with $13.2 million, representing a 9.6 per cent return on investment compared with 6.3 per cent. Trading and value added operations dropped from $15.6 million last year to SIO.IM, but the directors explain that if the S7M bonus from the July, 1984 devaluation is discounted the result represents an increase of SI.SM. A final dividend of 7.5 c brought the annual dividend to 14.5 c, up from 12c in 1984. At a press briefing of finance analysts and reporters, Mr Athol Hutton, managing director of Waitaki, said the name change has been proposed because

, in Auckland

the industry has changed its emphasis from a carcase killing operation to a more market orientated one. The company decided to stick with the name “Waitaki” because of the name’s meaning (clear, running, water) and the fact that the company has built up the name as a selling point for its products. “The name Waitaki NZ Refrigerating, , Ltd, used since the merger in 1975, was always recognised as a compromise and it has been generally accepted that a name change would be made at some stage,” said Mr Hutton. “Because of our strong move into added value consumer products and the range of diversity of our international marketing operations, we believe the name Waitaki International best represents us. “We realise there may be some sadness among staff and shareholders who were originally part of New Zealand Refrigerating, Ltd, or shareholders in it, but the meaning of the name itself is no longer as relevant as it once was,” he said. “We are no longer a company which trades only in commodities but a manufacturer and marketer of consumer products.” The operations general manager, Mr Joe Ryan, says the name change fits in with the company philosophy. The company is committed to market-led, value-

added, consumer sensitive operations. “What this company is doing is selling peace of mind to the consumer.” To achieve that it has to grab hold of the cost load on carcases which have been ebbed away by statuatory regulations such as hygiene requirements. It has to install the appropriate chilling, processing, and packaging technology to deliver a suitable variety of products direct to the consumer. In the industrial relations field it has been attempting to introduce shift-work in its processing departments to maximise the use of its new equipment. In the 1985 season Waitaki processed a record 12 million sheep and lambs, but Mr Hutton believes this level of throughput will be difficult to maintain. “We don’t expect throughputs to be down as much as some expect. Our schedule is off to a late start and the lambing percentage may be marginally down on last year’s 105 per cent. But we expect killing to be up as farmers kill ewe lambs for cash flow, and lambs will be heavier because farmers have delayed sending them for killing.” “Twelve million lambs this year is a quite remarkable effort. We will have to face up to a downturn in the future, especially in the North Island where Waitaki is not so heavily committed. Mr Hutton says that the weather augurs well for

next season, but the cut back in fanner spending on superphosphate could cause big problems if there is a drought, particularly in the North Island. Mr Hutton sees Waitaki’s future as less dependent on carcase throughput and concentrating more on food processing and specialised products — wolly skins, pelts, and phamaceutical products. “These are the areas identified as having growth potential, and are part of the reason for the change of name.” He was especially optimistic about the future of Phoenix Chemicals, a company established nine years ago to market the chemical and medical uses of animal products. Mr Ryan said that because of Waitaki’s huge throughput it can economically process some products as pineal glands which other companies are unable to economically use. “In most cases we are leading the world in quality although it has taken years to establish our name in the bio-chemical field. Credibility and quality are important, and having achieved that we are getting a major response from buyers in terms of capacity,” said Mr Ryan. In Waitaki’s traditional area of processing and selling meat, Waitaki believes it is better placed than other companies because of its strong emphasis on marketing. It has staff on the ground in Singapore, Dubai, and Saudi Arabia, as well as in the United States, United Kingdom and Japan.

Waitaki emphasised in its profit announcement that it is one company not “crying over spilt milk” about the floating of the New Zealand dollar. One reason for this is that much of the company’s sales are to European countries where the Kiwi dollar has fallen against such currencies as the mark and franc. “Our group is not immune to these factors but it should be remembered that a lot of the raw material is procured at prices which reflect overseas realisations. Additionally, the group actively manages its foreign currency exposures,” said Mr Hutton. Waitaki has divested itself of the loss-making Town House group of hotels but the price has not been disclosed and the sale is not included in the 1985 result. Dominion Breweries has purchased the chain. Commenting on the attempt by Brierley Investments to acquire a substantial shareholding in Waitaki, Mr Hutton said his company welcomed an increase in the investment by Wattie Industries. When the meat board ceases its involvement and control over sheepmeats, farmers will receive a 90 per cent payout on the new meat schedule. Waitaki believes the marketing will be more effective and that it will be well placed to take advantage of the changes. “The possibility of these changes has been foreseen and the organisation has already been adapted to accommodate the new direction as and when it occurs.”